How to Better Support Women Entrepreneurs in Canada

The Diversity Institute at the Ted Rogers School of Management, Toronto Metropolitan University

Published on March 25, 2024

Small and medium-sized enterprises (SMEs) employ 10.3 million people in Canada, representing more than 90% of private sector employment compared to only about 50% in the USA. The 2023 State of Women’s Entrepreneurship (SOWE) report tells us that in 2022, close to a million women in Canada were self-employed and that about 20% of SMEs are majority-owned by women.

“By closing the gender gap in entrepreneurship, Canada could add up to $150 billion in GDP to our economy.”

This means that investing in SMEs generally and women-owned businesses in particular is critical to job creation and economic growth. Studies have suggested that by closing the gender gap in entrepreneurship, Canada could add up to $150 billion in GDP to our economy. Globally, there is also evidence that investing in women produces concrete benefits not just for the economy but also for families and communities.

Women-owned businesses tend to focus more on innovation and are much more likely to create marketing innovations. As Canada strives for net-zero emissions, the evidence shows that compared to businesses owned by men, women are more likely to prioritize sustainability as well as economic goals.

The Barriers Women Entrepreneurs Face

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Despite progress, women still face barriers to accessing the financing and support needed to grow their businesses. Traditional criteria for funding tend to embed systemic biases that disadvantage women, who tend to have smaller businesses that are most often in the services sector. Businesses owned by women tend to be smaller, are less likely to be incorporated, have fewer employees, and are centred in industries such as retail and hospitality.

“Traditional criteria for funding tend to embed systemic biases that disadvantage women, who tend to have smaller businesses that are most often in the services sector.”

There is also evidence that financial institutions, venture capitalists, and angel investors treat men and women differently and that women, particularly racialized, Black, and Indigenous women, are held to higher standards. Even identical investment pitches produce different outcomes depending on whether they are delivered by men as opposed to women. Men are judged on their potential, women on their track record and even when they are funded, women receive less funding.

So, what can be done to help?

Calls to Action to Support Women-Owned Businesses

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Federal initiatives and those of other levels of government are going a long way in creating targeted investments and supports to advance women in business, lessen their challenges, and help them scale up and access new markets. Ottawa’s almost $7 billion Women Entrepreneurship Strategy aims to increase women-owned businesses’ access to the financing, support networks, and expertise they need. It also includes a commitment to evidence-based policy, and that is why our Women Entrepreneurship Knowledge Hub collects data and undertakes research not only to assess the barriers but also what works for whom.

“Improve access to financing—loans, venture capital or angel investing—by developing innovative delivery models designed to meet the needs of women entrepreneurs and increase accountability and transparency.”

Banks and big businesses also have a role to play in helping women entrepreneurs by tearing down the financial barriers that currently exist. They can improve access to financing—loans, venture capital or angel investing—by developing innovative delivery models designed to meet the needs of women entrepreneurs and increase accountability and transparency. These steps are critical to alleviating the financial barriers that currently exist. They can also put their money where their mouth is – dedicating a portion of their procurement dollars to majority-owned women’s businesses.

There is also evidence that increasing accountability and transparency help. The UK Investing in Women Code is an example of how “what gets measured gets done,” and Canada should adopt a similar approach. Even more than financing, expanding access to markets is critical through commitments to supplier diversity, which focuses on set-asides for women and diverse entrepreneurs.

As Canada continues to recover from COVID-19 in a challenging economic environment, we need to recognize that women-led businesses can create good, well-paying jobs to boost economic growth here at home, plus help us compete and win on the world stage. We also need to recognize the importance of meeting our commitment to the UN Sustainable Development Goals, and women entrepreneurs are critical to this.